Designing a performance measurement system to support materials management in engineer-to-order: a case study

doi:10.1007/s40436-015-0109-2

Advances in Manufacturing ›› 2015, Vol. 3 ›› Issue (2): 111-122.doi: 10.1007/s40436-015-0109-2

Previous Articles Next Articles

Designing a performance measurement system to support materials management in engineer-to-order: a case study

Børge Sjøbakk¹, Ottar Bakås¹, Oksana Bondarenko², Tara Kamran²

1 Department of Industrial Management, SINTEF Technology and Society, Trondheim, Norway;
2 Department of Production and Quality Engineering, NTNU, Trondheim, Norway

Received:2015-02-23 Revised:2015-04-22 Online:2015-06-25 Published:2015-05-27
Contact: Børge Sjøbakk E-mail:borge.sjobakk@sintef.no
Supported by:
This work has been conducted within the context of the projects MARGIN (Integrated and Responsive Maritime Supply Chain) funded by the Regional Research Fund Mid-Norway, EFFEKT (Effective Production of Advanced Maritime Equipment), the SFI Norman (Norwegian Manufacturing Future) programme supported by the Research Council of Norway and the project Linked Design (Linked Knowledge in Manufacturing, Engineering and Design) with funding from the European Union's Seventh Framework Programme ([FP7/2007-2013]) (Grant No. 284613).

Abstract

Abstract: There are many different production situations that can be employed to meet demand. In the engineer-toorder (ETO) production situation, products are manufactured to meet specific customer needs by unique engineering or significant customization. In such an environment, failing to supply the required materials in the right quantities and at the right time increases the risk of breaching due date agreements and thereby losing customer satisfaction. As such, materials management is one of the most important and critical processes within production planning and control in ETO. To bring attention and improvement to this area, ETO companies may benefit from a performance measurement system (PMS) that systematically monitors how well materials management is carried out. The design of a company's PMS varies with its production situation. Within the large body of literature on performance management and measurement, limited literature specifically addressing performance measurement in ETO has been identified. After being approached by a Norwegian ETO company requesting a PMS for materials management, the authors therefore set out to design the PMS from scratch, using literature on ETO, materials management and performance management and measurement as a starting point. The paper presents the proposed PMS. It provides a basis for further studies on the topic, and could be used by managers in ETO companies to assess and improve their materials management practice.

Key words: Performance measurement system (PMS), Materials management, Engineer-to-order (ETO)

Børge Sjøbakk, Ottar Bakås, Oksana Bondarenko, Tara Kamran. Designing a performance measurement system to support materials management in engineer-to-order: a case study[J]. Advances in Manufacturing, 2015, 3(2): 111-122.

TrendMD

References

1. Sjøbakk B, Bondarenko O, Kamran T (2014) A performance measurement system to support materials management in engineer- to-order companies. Adv Mater Res 1039:569-576

2. Amaro G, Hendry L, Kingsman B (1999) Competitive advantage, customisation and a new taxonomy for non make-to-stock companies. Int J Oper Prod Manag 19(4):349-371

3. Olhager J (2003) Strategic positioning of the order penetration point. Int J Prod Econ 85:319-329

4. Beckman SL, Rosenfield DB (2008) Operations strategy, competing in the 21st century. McGraw-Hill, New York

5. Persona A, Regattieri A, Romano P (2004) An integrated reference model for production planning and control in SMEs. J Manuf Technol Manag 15(7):626-640

6. Sjøbakk B, Bakås O (2014) Designing an engineer-to-order performance measurement system: a case study. In: Advances in production management systems innovative and knowledgebased production management in a global-local world. Springer, Ajaccio, pp 473-480

7. Neely A, Gregory M, Platts K (1995) Performance measurement system design: a literature review and research agenda. Int J Oper Prod Manag 15(4):80-116

8. Bourne M, Mills J, Wilcox M et al (2000) Designing, implementing and updating performance measurement systems. Int J Oper Prod Manag 20(7):754-771

9. Greenwood DJ, Levin M (2007) Introduction to action research: social research for social change. Sage, Thousand Oaks

10. McKay J, Marshall P (2001) The dual imperatives of action research. Inform Technol People 14(1):46-59

11. Andersen B, Fagerhaug T (2002) Performance measurement explained: designing and implementing your state-of-the-art system. ASQ Quality Press, Wisconsin

12. Wortmann J (1992) Production management systems for one-ofa- kind products. Comput Ind 19(1):79-88

13. Porter K, Little D, Peck M et al (1999) Manufacturing classifications: relationships with production control systems. Integr Manuf Syst 10(4):189-199

14. Hicks C, Mcgovern T, Earl CF (2001) A typology of UK engineer- to-order companies. Int J Logist 4(1):43-56

15. Wacker JG, Miller M (2000) Configure-to-order planning bills of material: simplifying a complex product structure for manufacturing planning and control. Prod Invent Manag J 41(2):21-26

16. Wikner J, Rudberg M (2005) Integrating production and engineering perspectives on the customer order decoupling point. Int J Oper Prod Manag 25(7):623-641

17. Bertrand J, Muntslag D (1993) Production control in engineer-toorder firms. Int J Prod Econ 30:3-22

18. Hill T (1993) Manufacturing strategy: the strategic management of the manufacturing function. Macmillan, London

19. Stavrulaki E, Davis M (2010) Aligning products with supply chain processes and strategy. Int J Logist Manag 21(1):127-151

20. Holweg M, Pil FK (2001) Start with the customer. MIT Sloan Manag Rev 43(1):74-83

21. Krajewski L, Wei JC, Tang LL (2005) Responding to schedule changes in build-to-order supply chains. JOperManag 23(5):452-469

22. Fredriksson P, Gadde LE (2005) Flexibility and rigidity in customization and build-to-order production. Ind Mark Manag34(7):695-705

23. Gunasekaran A, Ngai EWT (2005) Build-to-order supply chain management: a literature review and framework for development. J Oper Manag 23(5):423-451

24. Gosling J, Naim MM (2009) Engineer-to-order supply chain management: a literature review and research agenda. Int J Prod Econ 122(2):741-754

25. Sjøbakk B, Thomassen MK, Alfnes E (2014) Implications of automation in engineer-to-order production: a case study. Adv Manuf 2(2):1-9

26. Hicks C, McGovern T, Earl C (2000) Supply chain management: a strategic issue in engineer to order manufacturing. Int J Prod Econ 65(2):179-190

27. McGovern T, Hicks C, Earl CF (1999) Modelling supply chain management processes in engineer-to-order companies. Int J Logist 2(2):147-159

28. Riley DR, Diller BE, Kerr D (2005) Effects of delivery systems on change order size and frequency in mechanical construction. J Constr Eng Manag 131(9):953-962

29. Caron F, Fiore A (1995) ‘Engineer to order' companies: how to integrate manufacturing and innovative processes. Int J Proj Manag 13(5):313-319

30. Konijnendijk PA (1994) Coordinating marketing and manufacturing in ETO companies. Int J Prod Econ 37(1):19-26

31. Kingsman B, Worden L, Hendry L et al (1993) Integrating marketing and production planning in make-to-order companies. Int J Prod Econ 30:53-66

32. Hicks C, Braiden P (2000) Computer-aided production management issues in the engineer-to-order production of complex capital goods explored using a simulation approach. Int J Prod Res 38(18):4783-4810

33. Muntslag DR (1994) Profit and risk evaluation in customer driven engineering and manufacturing. Int J Prod Econ 36(1):97-107

34. Little D, Rollins R, Peck M et al (2000) Integrated planning and scheduling in the engineer-to-order sector. Int J Comput Integr Manuf 13(6):545-554

35. Terwiesch C, Loch CH (1999) Managing the process of engineering change orders: the case of the climate control system in automobile development. J Prod Innov Manag 16(2):160-172

36. Danese P, Romano P (2004) Improving inter-functional coordination to face high product variety and frequent modifications. Int J Oper Prod Manag 24(9-10):863-885

37. Pandit A, Zhu Y (2007) An ontology-based approach to support decision-making for the design of ETO (Engineer-to-Order) products. Autom Constr 16(6):759-770

38. Parthiban P, Goh M (2011) An integrated model for performance management of manufacturing units. Benchmarking Int J18(2):261-281

39. de Leeuw S, van den Berg JP (2011) Improving operational performance by influencing shopfloor behavior via performance management practices. J Oper Manag 29(3):224-235

40. Fortuin L (1988) Performance indicators: why, where and how? Eur J Oper Res 34(1):1-9

41. Behn RD (2003) Why measure performance? Different purposes require different measures. Public Adm Rev 63(5):586-606

42. Kaplan RS, Norton DP (1996) Using the balanced scorecard as a strategic management system. Harv Bus Rev 74(1):75-85

43. Stephens S (2001) The supply chain council and the supply chain operations reference model. Supply Chain Manag 1:9-13

44. Browne J, Devlin J, Rolstadas A et al (1997) Performance measurement: the ENAPS approach. Int J Bus Transform 1:73-84

45. Plemmons JK, Bell LC (1995) Measuring effectiveness of materials management process. J Manag Eng 11(6):26-32

Designing a performance measurement system to support materials management in engineer-to-order: a case study

PDF

Knowledge

Cited

Abstract

Cite this article

share this article

References

Related Articles 1

Recommended Articles

Metrics

Comments